Express Scripts and PCMA Follow-On Biologics Studies Are Based on
Flawed Assumptions That Undermine Their Credibility: BIO Analysis
Raises Serious Concerns Over Two Cost Savings Studies

WASHINGTON--(BUSINESS WIRE)--Feb 22, 2007 - Two recent studies
examining potential savings in health care costs resulting from the
establishment of a pathway for regulatory approval for follow-on
biologics contain significant flaws and assumptions that call into
serious doubt their validity, said the Biotechnology Industry
Organization (BIO) today in an analysis of two separate studies
released by the Pharmaceutical Care Management Association (PCMA)
and by Express Scripts.

"As a result of numerous flawed assumptions, and the lack of any
credible evidence to support these alleged savings, we believe
these studies should be rejected as unscientific and unreliable,"
stated BIO President and CEO Jim Greenwood.

"This debate should be focused on and driven by credible
science, fact-based studies and patient safety. These studies fail
to meet these standards. They cannot be relied upon in lieu of a
more rigorous analysis," stated Greenwood. "Congress should
recognize these flaws and misleading assumptions and reject these
studies as it evaluates proposals regarding follow-on
biologics."

The BIO analysis details nine serious flaws in the PCMA and
Express Scripts that call into serious doubt the validity of their
claimed savings. These flaws include:

-- Assumptions about patent expirations that are inconsistent
with credible analyst reports seriously call into question more
than $40 billion of the alleged savings cited by the Express
Scripts study;

-- Calculation errors in the PCMA study result in an
overestimate of savings of 40 percent, even taking their other
assumptions as correct;

-- Presuming that a pathway under one law would generate savings
for products approved under another law calls into question over
$17 billion in additional alleged savings in the Express Scripts
study;

-- Calculations based on determinations of interchangeability
that include presumption of savings beginning in 2007 are
unsupported in both studies.

"No credible analysis of follow-on biologics suggests that we
will see anything close to the savings we've seen from generic
drugs, nor any savings close to the flawed estimates claimed in
these studies," stated Ted Buckley, Ph.D, BIO's Director of
Economic Policy. "As leading health economists have pointed out,
the traditional generic drug business model is simply inapplicable
when dealing with these complex biological products."

BIO's analysis details flaws in the PCMA and Express Scripts
studies regarding claims of immediate savings from follow-on
biologics. The assumption made in both studies that follow-on
products will be promptly rated as interchangeable by the FDA and
that as a result market substitution will occur rapidly ignores
existing regulatory, scientific and market experience.

In fact, as noted in BIO's analysis, the U.S. Food and Drug
Administration (FDA) has not determined how interchangeability can
be established for complex proteins. FDA has stated that,
"Different large protein products, with similar molecular
composition may behave differently in people and substitution of
one for another may result in serious health outcomes." According
to the European Medicines Agency, "(d)ue to the complexity of
biological/biotechnology-derived products the generic approach is
scientifically not appropriate for these products."

The faulty assumption of interchangeability likely results in a
significant overestimation of savings, as products not designated
as interchangeable would very likely experience slower adoption
rates. These differences do not appear to be taken into
consideration in either the PCMA or the Express Scripts
studies.

BIO's analysis also finds that both studies are based on dubious
claims regarding patent expiration timelines leading to significant
overestimates of savings. The Express Scripts report acknowledges
that "additional patents have been granted, which may extend the
protection of Procrit and Epogen," but then goes on to make the
explicit assumption that, "This model assumes that these patents
would not be a barrier to biogeneric entry in this therapeutic
area." Using Express Scripts' own estimates, reliance on this
unexplained assumption accounts for more than half of their total
projected savings.

Furthermore, both studies also implausibly assume that the
current market share of the biologics will not evolve over time,
despite the fact that this has not been borne out by experience.
"One of the basic facts of a dynamic marketplace is that products
are replaced by newer, more innovative products," stated
Buckley.

Finally, the PCMA study assumes that for every biologic that
comes off patent there will be an associated follow-on product.
There is no credible evidence to suggest that it is scientifically
possible to develop a follow-on for every biologic that is
currently on the market. Further, many biologics have a limited
market, and therefore, it likely will be economically less
attractive for companies to pursue manufacturing of follow-ons for
many of these products.

"Overall, we find that these studies contain claims of potential
savings based on a seriously flawed set of assumptions that defy
current experience and lack credible evidence," concluded
Greenwood. "Congress should move deliberately as it examines
proposals to develop a pathway for follow-on biologics."

The full BIO analysis can be found at
http://www.bio.org/healthcare/followon/20070222.pdf .

About BIO

BIO represents more than 1,100 biotechnology companies, academic
institutions, state biotechnology centers and related organizations
across the United States and 31 other nations. BIO members are
involved in the research and development of healthcare,
agricultural, industrial and environmental biotechnology products.
BIO also produces the annual BIO International Convention, the
global event for biotechnology. -0-